KUALA LUMPUR: Malaysian palm oil futures closed higher on Wednesday, underpinned by supply worries due to heavy rains in the world’s second-largest producer and India’s move to scrap duty-free imports quota for sunflower oil.
The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange gained 46 ringgit, or 1.11%, to 4,188 ringgit a tonne.
The Malaysian Meteorological Department issued a danger-level continuous rain warning for Pahang, Negeri Sembilan, Melaka and Johor and warned of continuous rains in other parts of the country, state media Bernama reported.
India has decided to scrap a duty-free imports quota of 2 million tonnes of crude sunflower oil for the next fiscal starting from April 1, the government said, as the world’s biggest importer of vegetable oils tries to support local oilseed farmers.
The move could lead to higher imports of palm oil, which was earlier attracting taxes even as imports of sunflower oil and soyoil were allowed without any taxes under the quota.
India and China may need to replenish their edible oil stockpile in the coming months, and any adverse weather in India will add concerns about its domestic edible oil production, said Sandeep Singh, director of The Farm Trade, a Kuala Lumpur-based consulting and trading firm.
“(The) upcoming Bursa Malaysia Palm Oil Conference will keep prices volatile as the market awaits for forecasts and insights from top analysts,” he added.
Dalian’s most-active soyoil contract rose 0.1%, while its palm oil contract gained 0.6%. Soyoil prices on the Chicago Board of Trade were up 0.7%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Oil extended gains for a second session after a strong jump in manufacturing in China boosted the outlook for global fuel demand, making palm a more attractive option for biodiesel feedstock.